Canadian Vs American Dollar 2011 Essay

814 WordsMar 12, 20124 Pages
The Canadian dollar has been relatively at par with the US dollar in recent months. Is this a positive trend for Canada in the international community? In the recent years the Canadian Dollar has appreciated and today it is almost at par with the US Dollar. The purpose of this essay is to evaluate whether this appreciation is a positive or a negative trend for Canada in the international community. Before evaluating, one should have a closer look at the development of the Canadian currency and the influence on the Canadian economy. The Canadian currency’s downtrend lasted until 2002. In 2002 the Canadian currency started to rise from 62¢USD (US Dollar) per CAD (Canadian Dollar) and in 2010 the average exchange rate was 0,97 USD per CAD. (Statistics Canada. Exchange rates, 2011) This dramatic change has a great influence on the Canadian economy. When the CAD is at par with the USD, it means, that you can exchange one Canadian dollar for one US dollar. Compared with the former situation where you got only 62¢USD for one Canadian dollar, US products have become relatively cheap to Canadians. On the other hand it means that Canadian products have become more expensive for US Americans. As the CAD appreciates, the Canadian exports to the US, Canada’s most important export destination, start diminishing. This economic change leads to one of the impacts that the appreciation of the CAD has on Canada in the global community. While the exports to the US are shrinking, the Canadian industry starts to diversify its export destinations. In 2000, 83.6% of Canadian exports were sent to the US. Ten years later it had fallen to 73.0% (Statistics Canada. Imports, exports and trade balance, 2011) and Canada decreases its economic dependence on the US. The appreciation of the CAD also influences Canada’s tourism. Vacations in Canada become more expensive, the stronger the

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